Oracle outbids SAP for Retek

Oracle has signed a definitive deal to acquire Retek, defeating rival SAP in the bidding war for the Minneapolis-based retail software maker, the database giant said late Monday.

In a statement, Oracle said it will acquire Retek at a price of $11.25 for each outstanding Retek share. SAP, which had offered $11.00 per share for Retek, has dropped out of the bidding.

"Oracle has the largest applications business in North America, and we intend to expand that leadership position," Oracle CEO Larry Ellison said in a statement. "Combining Oracle with Retek is an important step in that direction, and it strengthens our position in the retail applications market globally."

Photo: Ina Fried

Entry to Retek's office building in downtown Minneapolis

The price matches the offer Oracle made Thursday, in response to SAP's latest bid. The total value of the deal comes to about $650 million.

Oracle's announcement puts an end to the bidding war for Retek. SAP had announced on Feb. 28 that it had reached a deal to buy Retek for $8.50 a share. Oracle responded on March 8 with a bid of $9 a share.

However, Retek will now have to pay SAP a $25 million termination fee, because it is walking away from its previous definitive merger agreement with the software giant. The two companies had bumped up the fee from $15 million when SAP upped its bid to $11 a share.

SAP plans to take that termination fee and reinvest it in its retail strategy, said Bill Wohl, an SAP spokesman. He declined to list other potential acquisition candidates in the retail market.

"The retail industry remains strategically important to SAP," Kagermann said, in a statement. "As a disciplined investor, SAP established a premium price for this niche business. However, we concluded that neither our shareholders nor retail customers would benefit from an auction process that would further inflate the purchase price."

Although Oracle is a longtime Retek partner and the two had held takeover talks last year, Retek's board had backed both SAP's original offer and its revised bid before Monday's announcement that it had reached a deal with Oracle.

Retek CEO Marty Leestma said Oracle's offer represents "a good deal for Retek stockholders" and that all of the directors who attended a board meeting had approved the pact. Retek did not identify which director or directors did not attend the meeting. "We will work with Oracle over the next several weeks to ensure that the integration is not disruptive for our clients and employees," Leestma said in a statement.

Oracle noted that nearly four in five Retek customers run that company's applications on top of Oracle's database.